Special Report: Real estate team risks and rewards

Gill South

3 weeks ago

The real estate industry is a large tent offering the opportunity for many different business models to thrive.

Tight-knit independent offices, 100-percent commission firms, big-brand franchisors, virtual brokerages, tech-driven startups and luxury boutiques all have their place. They benefit from their unique strengths and also must face their biggest threats.

Over the last several years real estate teams have emerged as another force in the industry that — though divisive— can no longer be brushed off as a fad.

Teams have established a strong foothold in response to the increasing consumer demand for a wide range of specialities and ‘round the clock service throughout the real estate transaction.

Percentage of Realtors who are part of a team. Source: National Association of Realtors

According to the National Association of Realtors (NAR), 19 percent of the nation’s Realtors are members of a real estate team, a setup in which team leaders primarily serve as the listing agent and lead generator while being supported by a variety of roles with segmented responsibilities, including transaction coordination, buyer’s agency, showing assistance and more. Of the 928 industry pros who responded to Inman’s survey, 41 percent were members of a team while 46 percent were not, and nearly 60 percent said they would consider joining or starting a team of their own.

However, as teams have risen in popularity, not all variations of the model have proven successful.

Those that fail to deliver a satisfactory consumer experience are most often plagued by misconceptions and poor communication. Industry critics have likened teams to a pyramid scheme that lures inexperienced agents with leads and traps them at the bottom of their career chasing buyers and busy work while helping to build someone else’s (the team leader’s) career.

Others run like well-oiled machines with the guidance of a good conductor and can offer real estate professionals better work/life balance without sacrificing top-producer status. Many also agree that teams stand to improve the real estate agent quality problem by giving newbies a supervised opportunity to learn the ropes and gain the experience necessary to earn consumers’ trust.

Of those who responded to Inman’s survey, 42 percent felt that the growth of teams is helping the industry rather than hurting it (27 percent), and for over 30 percent, the jury is still out.

As one respondent pointed out: “Teams don’t hurt the industry, shitty agents hurt the industry – individual or team has nothing to do with it.”

“I don’t think team vs. no team is the issue,” said a Denver broker. “Many teams hold their agents to high standards and offer very specialized agents in each area, helping the industry. Poorly constructed teams hire any able body with a license to manage weak leads and offer little-to-nothing in terms of supervision or standards, hurting the industry.”

So what separates the wheat from the chaff? According to survey, leadership, systems and communication all play a key role.

Calling for backup

The top reason, according to the survey, is to achieve better work/life balance (61 percent).

Unlike the jack-of-all-trades solo agent juggling lead generation, marketing, home showings, contracts and more, teams operate more like the typical business in which you have a group of specialists bearing the load.

Other reasons to start or join a real estate team according to the survey include:

To expand your business opportunities (56 percent)

To be a mentor or receive mentorship (56 percent)

To gain experience as a new agent/learn the business (53 percent)

To provide more effective representation for clients (50 percent)

And to a lesser extent:

To create an exit plan (35 percent)

To focus on single agency — sell side or buy side (21 percent)

For Sue Adler, CEO of the New Jersey based Sue Adler Team with Keller Williams, her second team has gone a lot better than her first when she “winged it” years ago with her previous company Re/Max.

Her current team, with buyer’s agents, listing specialists, a director of operations and more, has been the top-producing team by dollar value in New Jersey for the past three years with a forecast sales volume this year of $200 million and 200 transactions.

Inman Special Report: Are real estate teams helping or hurting the industry?

“Teams truly are running a business within a business and that is the first mindset shift that needs to occur if someone is interested in starting a team,” Adler said. Like other team leaders, Adler is building a salable business that she can step out of one day.

More than half of respondents agreed that new agents should join a team to gain experience, mentoring and leads early on in their careers, while 28 percent were not sure and over 17 percent advised against it.

“I started out brand new in real estate as a buyer’s agent on a high-producing team,” said a successful team leader based in Maryland. “I learned so much in a short period of time and felt it was easier to learn as I went along because I had support of my team leader. I was able to touch more deals than if I were on my own which in turn allowed me to experience so many different scenarios right off the bat. After eight years, I now run my own team with five buyer’s agents.”

Joining a poorly run team, however, can quickly crush your passion for the job if you are not receiving the support you need. It can also cost you your database, which should be feeding you the majority of your business when you branch out on your own.

A successful California agent on a team suggests that a new agent start on their own and once they’ve done five to 10 transactions, then consider joining a team. It’s about knowing yourself and what you need to succeed.

“Some people need to be independent and like the entrepreneurial nature of real estate,” said a Massachusetts broker. “Others prefer to be dependent on a team to help them grow and learn. If roles are clearly defined, training is consistent and comprehensive, compensation is clearly delineated and responsibilities are clear, new agents can learn a lot about the business very quickly and see success in just a few months. I’ve also seen new agents join teams, be given virtually no training and asked to do all the grunt work with no return on their time and efforts.”

On the consumer side of the coin, teams built on the value proposition of offering clients better resources, more comprehensive service and increased availability set themselves up for success and can bring a higher level of professionalism to the industry.

Having backup coverage was cited as the top benefit to consumers who work with real estate teams (73 percent), in addition to:

Broader availability of hours (52 percent)

A wider range of expertise and specialties (52 percent)

More agents working on the consumer’s behalf for the same price (51 percent)

Flexible showing times (48 percent)

And to a lesser extent:

Increased attentiveness to their needs (44 percent)

Superior marketing capabilities (42 percent)

More efficient transaction (41 percent)

Risking a ‘crazy’ client experience

Still teams can be vulnerable to certain pitfalls that result in a bumpy process for the real estate consumer. More moving parts means a higher propensity for dropped balls.

“Adding silos reduces efficiency [and] increases time and cost,” explained the CEO of a San Francisco firm. “The main problem is the consumer experience gets more crazy, incompetent and delusional.”

Confusion about who does what on the team (67 percent); not knowing who to contact during the transaction (64 percent); being bounced around between team members (63 percent); expectations about receiving undivided attention from the team leader (61 percent); poor communication (56 percent); and lack of personalized service (48 percent) can all leave a real estate client working with a poorly run real estate team disappointed.

“We are supposed to counsel and educate our clients,” said a Texas coach, who argued that teams represent the sales-driven, compartmentalized approach to real estate. “We are supposed to be a guiding expert in the biggest financial decisions most people make. The team model breaks that down to: ‘You make the sale, and your assistants do everything else.’”

That creates problems if a team expects too much of its admins or ancillary roles. Separating responsibilities can be disorienting when team members aren’t equipped to handle the tasks thrown at them, such as answering questions about properties that they aren’t familiar with and only the team leader could aptly handle.

Even worse than a struggling team is one that relies on the model to artificially inflate its worth.

“Teams have become a vanity metric without any quality increase for the consumer experience,” said a successful New Jersey agent. “It has simply become a way for the agent to give the impression of being more successful than they really are.”

What’s in a team leader?

Therefore much of a team’s success hinges on whether the person in charge can account for and steer clear of these innate risks. Eighty percent of respondents to a previous Inman survey said that a clearly designated leader was a major factor in a team’s success.

This survey dug further into that insight, and respondents revealed that being a strong communicator was the most important attribute in a team leader (85 percent), in addition to having a clear vision for the team (84 percent), solid management and delegation skills (81 percent) and a positive mentality (81 percent). Experience in the industry, a commitment to continual learning and a team-player mindset were also high on the list of team leader must-haves.

“I had a leader who did not focus on people but systems,” warned a Florida agent who had just left a team. “The old saying ‘people don’t leave jobs or companies, people leave people’ was never more evident.”

And if team leaders aren’t careful, that coveted work/life balance that the team model offers can easily be compromised if they start spending more time managing their team than interfacing with their clients.

Moreover, teams work best when the leader is genuinely interested in the success of the team as a whole ahead of their own career. They should have clear expectations, make sure team members’ work is distributed evenly, set single team goals, host regular opportunities to connect and execute an effective onboarding program.

A prominent Seattle team leader shared her approach:

“We do a weekly Monday huddle. We treat all of the clients as if they are the team’s and provide coaching and problem-solving at the huddle. We do monthly one-on-one meetings to support and push for increased prospecting. It is key to the long-term success that each team member is prospecting, using the strength of the team brand.”

Even the best teams will fail without a strong supply of leads, and a lack of leads is one of a team’s biggest risk factors, a previous Inman survey found. So another main responsibility of the team leader in most cases is to generate leads. Over two thirds of respondents felt that the team leader should be accountable for providing the leads.

Teams should focus their lead generation efforts generally among their sphere of influence (73 percent) networking (65 percent) and referral partners (62 percent), according to the survey.

Better Homes and Gardens Rand Realty has just introduced a team model to its agents, and training director Jeffrey Halpern thinks that the managers of offices should be trained in how to deal with teams and keep the model streamlined.

“It’s a pretty simple plan and that’s the way it should be — some of these team models are so convoluted,” Halpern said.

Inman Special Report: Are real estate teams helping or hurting the industry?

Struggling team leaders often rely too much on team members and forget they have to oversee them — and clients pay that price, according to Halpern, who added that when you see a team run well, it’s hard not to see the argument in favor of this model.

Best tech tools for teams

Some of the common problems that teams face are being solved with technology by improving external and internal communication, boosting efficiencies and facilitating shared workloads.

The top types of tech tools for teams to invest in include:

A contact relationship manager (CRM) (78 percent)

E-signature software (72 percent)

A team website (70 percent)

Task management (64 percent)

Email marketing (59 percent)

Video marketing (48 percent)

Instant messaging platform (45 percent)

Transaction management systems were also frequently cited in the survey with recommendations specifically for dotloop and SkySlope.

“Technology has a major impact on our team,” shared an agent based in Tennessee. “We have a full-time marketing director that creates and builds websites that drives leads to our team members daily in two different markets. We have only been in the business for a short time, and it would have been difficult for us to have had the amount of growth we have had without technology.”

In breaking down the best available options for a team’s most important tool (CRM), respondents were fragmented in their votes. Top Producer came most recommended (21 percent), followed by BoomTown (19 percent), Follow Up Boss (9 percent), Contactually (9 percent) and Salesforce (9 percent).

When it comes to improving team collaboration and communication, teams should develop systems and adopt tools that work best for their particular business. In terms of available options to streamline these key functionalities, respondents were most likely to recommend Google for Work (22 percent), followed by Contactually for Teams (8 percent), Slack (8 percent) and Workplace by Facebook (7 percent) — but like the CRM suggestions, none of these technologies were overwhelmingly the “right” choice.

Although consistent face time and communication is key, agent team leaders need to be careful with certain requirements such as hours of work and mandatory meetings. Real estate law requires managing brokers to supervise their agents; however, there is no provision in the law for an independent contractor team leader to supervise an agent. Read Inman’s story, “Is your real estate team violating the law?” for more insights.

Responsibility starts at the top

If a team is going off the rails, the brokerage is at fault, and the brokers need to have a conversation with their top producers about it, according to Real Estate Guidance coach Pam Ermen, who teaches companies and real estate agents about how to structure healthy teams.

“A team is a growth vehicle in real estate, that’s all it is. These people are a microcosm of a healthy office,” Ermen said.

A little over 46 percent of respondents felt that their brokerage managed teams aptly under their umbrella, while a little under 30 percent did not and nearly 25 percent were not sure.

“It is a mistake for brokers to assume new agents are receiving training,” said a California agent. “Teams are giving new agents a task, and often do not receive the proper exposure on all of the tasks that make an agent great with time and experience. Is that the best thing for our industry?”

If brokerages are not on top of managing teams in their business, they should do something about it soon. Our research showed that it is likely that real estate firms are going to have more top producers take the team route with nearly 60 percent of respondents saying they would consider joining a team or starting one of their own.

Brokerages should offer an environment where multiple types of real estate models could work together, said respondents.

Inman Special Report: Are real estate teams helping or hurting the industry?

“Brokerages need to think bigger and look for ways to provide opportunities for everyone. Look for win-win opportunities so that as teams get bigger so does the brokerage,” said a successful Maine team leader.

Brokerages shouldn’t feel threatened by the team model, added those in the pro-team camp.

“Team leaders typically do not want the responsibility of being a broker, so the broker is not going away anytime soon,” said one respondent.

A Connecticut broker added: “Teams make it easier for management in a brokerage, plus ease the recruitment quota and increase sales volume to generate more calls to the office to increase market share.”

Don’t wait until you start losing your best agents who move to other team-friendly brokerages, advised a former broker/manager. “Teams are either the best or the worst thing that happens to a company culture, and either outcome will be a product of developing a well defined set of policies and procedures,” she said.

Aware that some brokerages see teams as a threat, Adler — who runs the team at Keller Williams — stresses that she gives back to the company, too.

“It is important to keep a great relationship with your broker and office team leader,” Adler said. “We do training for the office and they often let us know when they find a great fit for us for the team. The broker/team relationship should be a win-win. Also, teams should be the keeper of the culture for the office. Since they are typically the highest producers, it is important that we are role models for the office and the industry as a whole.”

Are real estate teams the way of the future? The answer to that may be out of the industry’s hands.

“Teams have no doubt proliferated over the last few years, but done so under the assumption it was to provide better service to the customer,” said an agent based in Portland, Oregon.

“However, much of the personal or relational aspect of the transaction is lost with the shuffle from team member to team member as they go through the process. Is this good or bad? That would be up to the consumer. Ultimately, they decide what gets to work for us and what doesn’t.”